Budget Resolutions and Economic Situation

Debate between George Freeman and Mark Hoban

Wednesday 19th March 2014 Commons Chamber

[Mr Hoban]

My hon. Friend is absolutely right. The number of people who want to take control over their own lives and employment, and who want the security that comes from self-employment, is significant, and the number of schemes that we have introduced to help young people find self-employment as a route out of poverty and unemployment have been a huge benefit to those who want to set up their own businesses.

The dynamism that we have seen in the private sector, which has led to this increase in employment, has been coupled with welfare reform—a key part of our long-term economic plan. Welfare reform has sharpened the incentive to work, and we expect more of those who are out of work, too. We have brought forward the point when we work with lone parents before their youngest child starts school, so that they are better prepared to start work rather than remain on benefit. For far too long, people who have been out of work through illness have been written off by the system and expected to live on benefits for the rest of their working life. We have been working with them to ensure that they get into employment so that they can look after themselves and their families, and achieve the dignity that we so often take for granted.

The recovery in employment is a product of a strong and dynamic private sector. I welcome the measures that the Chancellor has announced today to encourage business investment and to double the annual investment allowance to £500,000. That will encourage businesses in my constituency that are strong, growing, dynamic manufacturing businesses to invest more in capital equipment. They are aided by the reduction in corporation tax. We should not forget the importance that that has in sending a signal to businesses overseas that the UK is open for business and a place where they should do business. The reduction in corporation tax is mirrored by measures around the employment allowance and scrapping national insurance for young workers under the age of 21. These tax changes, along with cuts to red tape, the investment in skills and the reform of training, are part of our long-term plan to sustain the economy and job creation.

I want to spend a few minutes on the savings measures announced in the Budget. Since they took office, this Government have made radical reforms to pensions and savings. They ended compulsory annuitisation and we are seeing the successful roll-out of auto-enrolment, which will give many people their first chance to build up a pension pot for their retirement. In the next Parliament, we will be launching a single-tier pension, which will mean that people will retire on a pension above the level of means-tested benefits. We have seen the launch of the Money Advice Service and strengthened consumer protection through greater powers for the Financial Conduct Authority. They are important steps that will help reform the savings landscape, and as the Chancellor said they also create a fresh platform for radical reform of pension savings.

When compulsory annuitisation was scrapped, people could take full advantage of the flexibility of income drawdown products only if they could demonstrate that they would not be entitled to means-tested benefits. That meant they had to have a guaranteed income of £20,000 a year. That of course predated the introduction of a single-tier pension, and the limit was set at an amount that ensured that people would not fall back on those means-tested benefits. Now that the single-tier pension is in place, it is right to reduce that amount to £12,000 this year.

We also know that for many consumers it is difficult to shop around to buy an annuity. They are bewildered by the choice in the market, and annuities are often the only product that many of them can buy. Recent surveys have shown just how badly off consumers are as a consequence of not shopping around. I think that the Chancellor’s announcement today about the simplification of the way people can use their defined contribution pension pot will radically transform the insurance and savings market. It will force insurance companies to demonstrate that their products are good value, and create room for innovation for others to come up with products that will help people maximise their income in retirement.

[George Freeman (Mid Norfolk) (Con)]

Does my hon. Friend agree that the historic reforms announced today on the pensioner bond, the tax simplification for annuities and the scrapping of the 10p rate will begin the process of rebuilding a savings culture in this country? We last did that in the 1980s, but it was shamelessly attacked by the former Prime Minister through a series of stealth taxes on savings and pensions.

[Mr Hoban]

My hon. Friend is absolutely right. I think this should be seen as the first stage in a series of reforms, because as the Chancellor also said in his statement, the Office for Budget Responsibility predicts that the savings ratio will continue to fall. As well as ensuring that we can provide a better deal for those in retirement, a better way for them to spend their pension pot and encouragement for them to build up more through individual savings accounts, we need to do more. I will come back to that in a moment.

These are radical reforms. I welcome another part of the package that goes hand in hand with the increased flexibility. The challenge that many pensioners face is finding advice and someone to help them through complex decisions about what they should do in retirement. Recent surveys have shown just what a bad job some of the comparison websites do for people trying to buy an annuity.

The right to advice is an important part of the package of reform, but I suggest to those on the Treasury Bench that we need to go further. The auto-enrolment savings system assumes that people do not think too hard about saving but save automatically. We then expect them at the point of retirement to engage in saving. We need to make sure that there is more advice and guidance available before they retire, to help them think about what age they want to retire at and what sort of income they want to retire on. I think that a key part of the next stage of reform should be to take that right to advice and see how we can provide better advice for people in the run-up to retirement in order to help them provide more for their retirement.

Oral Answers to Questions

Debate between George Freeman and Mark Hoban

Monday 5th November 2012 Commons Chamber

[Mr Hoban]

I would be grateful if the hon. Lady supplied me with the evidence she mentions. There are clearly situations in which people go straight into the support group without undergoing a work capability assessment. It depends on the information supplied when they originally make the application.

[George Freeman (Mid Norfolk) (Con)]

T8. The scandalously high rate of youth unemployment was perhaps one of the previous Government’s worst legacies, and my constituents warmly welcome the creation of 1 million new jobs and 600,000 apprenticeships. Does the Secretary of State agree that in rural areas young jobseekers face particular challenges in accessing small, fast-growing companies in the rural economy, and will he join me in supporting the local voluntary big society initiative launched by The Norfolk Way—it started a work club and enterprise bursary in which local entrepreneurs support jobseekers—in Mid Norfolk last week?

Finance Ministers’ Meeting (Ireland)

Debate between George Freeman and Mark Hoban

Wednesday 17th November 2010 Commons Chamber

[Mr Hoban]

Indeed, and the hon. Lady makes an important argument about why we need to stand by the Irish Government and provide assistance if they request it.

[George Freeman (Mid Norfolk) (Con)]

Can the Minister provide my constituents and the markets with the reassurance that any British involvement will be conditional on the full involvement of the International Monetary Fund?

[Mr Hoban]

As no request has been made, I cannot comment on that. Where support is given to economies, it is commonplace for the IMF to be involved.